How much of a risk taker are you? How safe do you like to feel?
There’s a matrix that you can apply to risk taking with 3 key issues to be balanced against each other. These are: the likelihood of the worst outcome occurring, the level of seriousness of that worst outcome and your own competency or skill level.
The idea of this matrix came to me when I was on a paddleboard, considering whether to venture out onto quite deep water. The worst outcome was to fall off. At that time, I had never fallen off a paddle board (I have now!), so the likelihood was in one way fairly low. However, so was my competency level.
It was still early in the season and the sea was still very cold so that raised the score for the ‘seriousness’ of the outcome. I was therefore much happier on water where I could see the bottom. Also, the deeper the sea, the more wave movement from boats, tide etc., all of which might challenge my skill level.
In this case it was a combination of the worst outcome plus a low level of competency that were the key factors. Had I been more competent, the likelihood of outcome would have been reduced. Similarly, if the water had been warmer, the aversion to the worst outcome would have been reduced so I might have taken that risk.
What risks or challenges are you facing at the moment? Can you apply the three-way matrix to your situation? What is the worst outcome? How likely is it to occur? What is your level of competency to avert or cope with that worst outcome?
When you focus on each of the factors you might decide that either the worst outcome isn’t that bad after all or that the likelihood of it happening really isn’t that high.
Or maybe there’s something you can do to reduce either of those things. That may be by improving your competency or by changing the environment, timing etc.
Using this matrix can be a useful way of identifying what the real factors are at play when you recognise that you are anxious about taking a risk. Using it can also motivate you to carry out due diligence to minimise the real risk.
What impact would the worst outcome have on you? Will you learn from it or might it put you off from ever trying again?
How damaging to you or your business could it be? How beneficial? How great will you feel if you take the risk and all goes well?
All of these issues play a role in our decision making.
We all take risks every day without even thinking about them by getting into a car, onto a plane, crossing the road, etc., so you are a risk taker.
What risks are you comfortable to take and how can you stretch your comfort zone to become even bolder?
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